Gibson Electronics Identifies Licensees in Various Countries Who Produce and Sell

Multiple Choice

Gibson Electronics identifies licensees in various countries who produce and sell the company's products in their countries in return for a royalty fee on every unit sold. Gibson Electronics' approach is risky because of the problems associated with

A) sharing valuable technological know-how with a potential competitor.
B) an increase in transportation costs, especially for those products that have a low value-to-weight ratio.
C) doing business in a different culture where the rules of the game may be very different.
D) the possibility of an increase in trade barriers such as import tariffs or quotas.
E) increased production costs.